– Urges government to dismantle any attempt at monopoly
Mkpoikana Udoma
Port Harcourt — The Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN, has strongly criticized Dangote Refinery’s recently announced PMS prices of N960 and N990 per litre, describing it as “exploitative” and “inconsiderate”.
Recall that Dangote recently announced the price of PMS, alleging that anyone who claims they can land PMS at a price cheaper than N960 and N990 per litre, were importing substandard products and conniving with international traders to dump low quality products into the country.
Group Chief Branding and Communications Officer at Dangote, Mr Anthony Chiejina, also alleged that “an international trading company has recently hired a depot facility next to the Dangote Refinery, with the objective of using it to blend substandard products that will be dumped into the market to compete with Dangote Refinery’s higher quality production.”
But PETROAN’s National Public Relations Officer, Dr. Joseph Obele, argued that Dangote Refinery’s pricing strategy ignores the massive concessions it received during construction and was based on international market rates rather than production costs plus a fair margin.
PETROAN announced that it has concluded plans with foreign refinery counterparts and financial partners to import high-quality PMS and sell it at a lower rate than the current market price once they receive their import license from NMDPRA.
Obele explained that the organization aims to enter the market before December 2024, pending approval of their import permit license by the regulatory agency and access to foreign exchange from CBN at the official rate.
He said the allegations that PETROAN will import inferior products and claims of an international company establishing a PMS blending plant in Lagos were strategies by Dangote Refinery to push others out of the market and achieve monopoly.
Obele cited previous instances where Dangote Refinery’s CEO made similar allegations against NNPC Ltd, stating that their products were inferior; stating that Dangote Refinery’s actions were clear attempts to maintain market dominance and exploit Nigerian consumers.
“The publication by Dangote refinery that PETROAN will import substandard petroleum products is not coming as a surprise to stakeholders, because such is his usual gimmick for maintaining monopoly,” he said.
Obele emphasized that PETROAN never compared Dangote’s PMS price with any other, as Dangote’s price was unknown until the recent press release.
He said “Dangote Refinery enjoyed massive concessions for accessing foreign exchange during construction, which should have led to a lower price, instead, the refinery’s price of N990 per liter is seen as inconsiderate and exploitative.
“The core determinant for setting price is consideration for cost of production then add a fair margin. But this wasn’t the case for the determinant of PMS price by Dangote refinery as they said the parameter was comparison with the international selling rate at the global market.
“A nation that gave you a yet to be disclosed concession for foreign exchange which was highly criticized by financial experts, such a country Pricing template shouldn’t have been templated by the selling rate at the international market but rather it should have been cost of production plus fair margin.
“Goods from the China’s markets are not selling as high like goods from the America’s market because cost of production differs.
“Evidences available showed that diesel (AGO) as a deregulated product was selling less than N800 per litre in Nigeria market few weeks before the commencement of AGO production by Dangote Refinery, at the entrance of AGO market by Dangote refinery we witnessed a rapid surge above N1,000 per litre as against the perception of a ‘salvaging refinery’.”
Obele advised that the Port Harcourt and Warri refineries, after rehabilitation, should be privatized and handed over to reputable firms in partnership with PETROAN and other critical stakeholders.
This, PETROAN believe, will enable the operators of the government-owned refineries to withstand aggressive competition.
“Stakeholders concerns is a prayer that the process of the Privatisation should be transparent using the Indorama Petrochemicals as a model as against Maintenance Repairs And Operations contract.”
PETROAN stressed the importance of promoting competition in the downstream sector to reduce PMS prices, and urged the Federal Government to discourage and dismantle any attempt at monopoly, citing the benefits of an all-inclusive market where multiple players operate.
The association further called for an all-inclusive stakeholders’ meeting, including DAPPMAN, MEMAN, PETROAN, IPMAN, NUPENG, and PENGASSAN, to find a lasting solution to PMS pricing instability in the country.
